LOCAL ECONOMIC DEVELOPMENT PLAN FOR TBILISI ... - LED

salaries rose the most in the last examined years, i.e. 2005-2006. Another
cluster where the salaries are higher than the business cluster average is the
industry cluster where the significant rise in salaries – by about 50% - took
place last year. The lowest salaries, not exceeding 220 GEL, were earned in
the tourist cluster, although they did rise by 30% in the last examined year.
Also, the pay level offered on this market in the three last examined years
(2004-2006) was 30% lower than the salaries in the whole business cluster.
The salaries in the trade, repair of vehicles, personal and household goods
cluster grew considerably in the last examined year (2005-2006) and are
comparable with the mean salary levels in the whole business sector. In the
previous years the salaries rose gradually, but no more than by 10% yearly.
- The comparative analysis of the turnover and employment in 2001-2006 in
Tbilisi and Georgia demonstrates a strong correlation between the processes
taking place on the examined markets in the Georgian national economy and
in the economy of Tbilisi. The tendencies observed in Tbilisi have their
reflection in the tendencies happening nationally, which is due mainly to the
fact that Tbilisi economy in the area of the examined clusters accounts for
over 50% of the national turnover and employment.
The sector of strategic importance for the city economy is the banking sector.
Although, when compared to other analysed industries, it does not generate
many jobs, but it employs staff that is better qualified and better paid than
other business sector employees. This is why a descriptive analysis of the
banking sector in Georgia and Tbilisi has been carried out as well. In 1994 a
reform of banking sector, introduction of a two-tier banking system (National
Bank of Georgia and the commercial banks). 18 banks functioning in Georgia
(March 2007), 13 of them are foreign controlled. Commercial bank’s total
assets comprise 31% of GDP and liabilities comprise 24%. The perspectives
of Georgia becoming the financial centre for the region are high but there are
also significant challenges:
Opportunities:
- Azerbaijan growth – many forms of banking and insurance are impossible to
introduce in the Arab countries. That is why investors from Muslim countries
tend to locate their money in Christian countries’ financial institutions. It is a
challenge for Georgia to attract capital from Muslim Azerbaijan which was the
world’s fastest growing economy in 2006 with GDP real growth rate amounted
to 32.5%.
- Attractive location – Georgia is located in the centre of the Caucasus,
bordering the Black Sea, between Turkey and Russia, there is no developed
financial centre in this area
- Professional support from western countries available – the example of
Dubai shows that a country which is developing a big financial centre can use
international help, especially in applying appropriate legal system and
introducing special conditions for investors
Challenges:
- International standards requirements: transport links, transparent regulatory
and legal systems, technological sophistication, a good quality of life for
expatriate bankers, liquid capital markets, etc
- Georgia still lacks internally adequate level of capital to finance large
projects. Most local banks are unable to finance multimillion dollar projects.
On the other hand, foreign banks are unfamiliar with their country and might
be reluctant or too expensive to finance local projects. Regional banking
would create a larger pool of capital to finance internal projects in Georgia.